In a move aimed at forging stronger economic relationships with new partners post-Brexit, the UK is poised to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free-trade bloc consisting of 11 countries in the Indo-Pacific region.
This will make the UK the first new member since the bloc’s inception.
The UK government, under Prime Minister Rishi Sunak, views membership of the CPTPP – whose members include Australia, Canada, and Japan – as a boost to both economic growth and geopolitical relations. The UK anticipates a long-term growth of £1.8 billion ($2.23 billion) per annum, with the potential for an increase in this figure should other countries join the bloc.
By joining the CPTPP, the UK is seeking to expand its global influence following its departure from the European Union.
The UK aims to play a part in shaping regional trade regulations in the years ahead through its CPTPP membership. This could involve the UK and other members preventing China from joining the bloc to maintain high trade standards. The UK has emphasized that it did not compromise on its environmental and food standards to secure membership.
After two years of negotiations, the British government announced on Friday that it had formally agreed to become the 12th member of the CPTPP. The other eight members are Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
Once the UK becomes a member, the free-trade bloc, with a population of 500 million, is estimated to represent 15% of the global GDP, according to the International Monetary Fund.
In a statement, Sunak expressed his belief that joining the CPTPP would position the UK at the core of a growing and dynamic group of Pacific economies. The UK will be the first European country and first new member to join, promising “real economic benefits of our post-Brexit freedoms.”
CPTPP membership will eventually result in zero-tariff trade across various import and export sectors, enabling the UK to gain greater access to Mexico, Canada, and Japan for dairy exports. This will boost the UK’s automotive and alcohol industries, with the export of spirits to Malaysia. Tariffs will also be reduced on imports of rice from Vietnam, bananas from Peru, crab sticks from Singapore, and palm oil from Malaysia. However, the latter is expected to raise concerns due to its link to deforestation.
While the membership promises significant advantages, it should not be compared to the UK’s previous membership of the EU. Unlike the EU, the CPTPP operates more like a multinational trade agreement and does not have a court or budget.
Furthermore, there is still a long way to go to reverse the economic impact of the UK’s exit from the EU, its biggest trade partner. The head of the UK’s independent budget watchdog recently estimated that Brexit may have caused a 4% decline in economic output.
According to British High Commissioner to Singapore, Kara Owen, each country will have to ratify the deal. She told Bloomberg Television’s Haslinda Amin on Friday that the process would take some time, but that the UK is eager to start educating its companies in the meantime.
Despite the benefits of joining the CPTPP, the economic gains for Britain are expected to be limited. The UK’s own projections, published in 2021, indicate that joining the CPTPP will only increase its economy by 0.08%, partly because it already has bilateral trade agreements with over half of the 11 member states. However, there is a possibility for this figure to increase if other nations, such as Thailand and South Korea, join the bloc.
Following Brexit, the UK has been working to shift its foreign policy towards the Indo-Pacific region. Earlier this year, Sunak signed defense agreements with Australia and Japan as part of an effort to counter China. Joining the CPTPP will further align the UK with the region and give it a more direct voice in regional affairs.
Trade expert Sam Lowe, a partner at consultancy Flint Global, stated on his blog that China has applied to join the bloc and could potentially persuade many of the CPTPP members to say yes. However, once the UK becomes a member, it can veto China’s entry, which will allow other members to use the UK’s refusal as a cover and reject China’s application.
David Henig, the director of the UK Trade Policy Project at the European Centre for International Political Economy, believes that the CPTPP is a “shallow” trade deal that primarily focuses on reducing tariffs “in the same way that our existing free trade agreements with nine of 11 members do.” However, he also believes that the membership could lead to future benefits as new members join and that it will bring the UK closer to important allies such as Japan and Singapore in retaining open global markets.
